Monday, October 27, 2014

How Apple and Facebook have taken gender discrimination to a new level


Over the last week or so we have seen a vibrant debate unfolding after the announcement of Apple and Facebook’s latest benefit: Female employees can store and freeze their eggs on the company’s dime so that they can postpone pregnancy beyond the phase where they might want to just focus on their careers.

I put the case up for debate in my undergraduate classes on business ethics this week. It was a fascinating experience. To start, we assessed the upshot. There is a surge of female professionals who attempt at pregnancy in their forties and thus a surge in in-vitro fertilization and a host of other avenues to late motherhood luckily provided by progress in obstetrics these days. But there is also a fair number of women who just have to suck it up that by the time they can put their head around having babies, that ship has sailed.

Here, such an offer seems to be a big benefit. You can progress in an environment where your commitment to the job is 24/7 – like your male colleagues – and still enjoy motherhood at a later stage. And your babies will be built out of genetic material that is as good as it would have been had you dared at the impossible of merging both, career and motherhood. This policy indeed provides women with more options, more choice to freely decide what to do with their lives, their careers and their aspirations at the personal level.

But upon further scrutiny, my students unearthed three major problems. The first is fairly obvious: what is offered as an ‘option’ by the company may quickly become the ‘default’. What will happen now at Google if a 32 year old women tells her boss she wants to go on maternity leave? Given the options, she makes a statement clear and loud that she prefers her personal priorities over the company’s. In organizations, rules prescribe roles. This new option potentially excludes motherhood from what a ‘high potential’, future executive at Google should prioritize in her most fertile years.

A second focus of discussion turned out to unveil the unsaid. What about the male role in child bearing and rearing? The tacit assumption of such a policy seems to be that not a single of Apple or Facebook’s male employees will ever need similar help or support in his career because of having children. In some ways then the policy just reflects rather problematic gender stereotypes: mothers get distracted from their careers by having children; fathers just carry on as if nothing has happened. Yes, there are different biological constraints on women; but having and rearing a child also totally involves the father – unless he is a complete moron (or Google and Facebook’s model employee?). Fair enough, Facebook also extends an option to male employees to freeze their sperms: after all, a significant threat to post-40 pregnancy is not the female egg, but increasingly the deterioration of male sperm at that age. But the message is the same: postpone that baby business!

Which leads to a third objection which cuts to a deeper level. The age between 25 and 35 for a woman is the phase where biologically motherhood is the most likely. It is also the phase where most women are at the prime of their adulthood: mature enough to make tough life choices on partners and lifestyles, but also vibrant and physically energetic enough to dedicate full energy to their pursuits. By offering this option, aren’t Apple and Facebook just saying: ‘Give us the best years of your life, your kids can put up with whatever is left of you at a later stage’?

One of my students put it more bluntly: ‘If you translated this policy to other forms of discrimination in the workplace, such as racial discrimination, this would amount to saying to black people: “Look, you are very welcome here, but just to make it easier, we offer you this cream that will make your skin as white as everybody else’s here.”’ This new benefit essentially offers to a woman to be just like her male colleagues, happily stripped of all her female ‘impediments’. In some ways, that is gender discrimination at its worst.

Apple and Facebook deserve praise to recognize a common and pressing problem. Admittedly, they have policies regarding maternity benefits and childcare that are better than most other American companies. But the moral imagination they applied to this particular solution falls short of the creativity that made them billion dollar companies. If they are willing to throw $20,000 at the problem, why not offer more choice to both female and male employees? The women  (and men) contributing to the company are not just ‘human resources’ ready for maximum exploitation.
DM
Artwork by Keoni Kabral, reproduced under the Creative Commons License.

Sunday, October 19, 2014

The future of business ethics research


This weekend offered an interesting opportunity to discuss, dissect and reflect on the state of the art of business ethics research and some of its future trajectories. At the Wharton School of the University of Pennsylvania a small group of business ethics scholars gathered from all around the globe to celebrate and honor the work of one of the faculty members, Professor Thomas Donaldson. Donaldson, a philosopher by training, can be considered one of the pioneers of the business ethics field and one of its most longstanding and certainly most influential voices over the last four decades.

Some of the speeches at the event focused on appraising and celebrating Donaldson’s impressive body of work, including many humorous interjections on Donaldson as a person by some of his contemporaries such as Norman Bowie, George Brenkert, Ed Freeman, or Pat Werhane. Most of the day though was dedicated to work by scholars who build on, extend, refine, and continue some of Donaldson’s work, including also entering a critical dialogue with his ideas.

Thomas Donaldson
Donaldson’s work is not easy to summarize as it covers a number of areas, incl. ‘hard core’ philosophical topics. Without downplaying any of those, one could argue that his work (mostly manifest in books and seminal articles) on corporations and morality, ethics and international business, and Integrative Social Contract Theory (ISCT, together with Thomas Dunfee) count among the most influential ones for the business ethics field. Much of the day was dedicated to develop those ideas further, and in particular ISCT seems to still have a long life ahead.

Taking a step back after reflecting on Donaldson’s work for 1½ days, it strikes that next to his solid contributions it is both his approach and his choice of topics decades ago which have maybe the strongest potential to inform work in business ethics for decades to come. Donaldson deserves credit for breaking out of the extant consensus in both, the narrower business ethics field as well as the general gist in management studies with an innovative take on at least three core research topics.

What is the unit of analysis in business ethics? 

For most of its short history, certainly until the mid 1990ties scholarly work in business ethics was mostly looking at the organizational level, or even below that, at the level of individual decision-making. What is to admire about Donaldson as a scholar is that he broke out of that consensus, most remarkably when publishing his book and papers around ISCT. The basic tenet of ISCT is that whatever happens in terms of ethical or unethical behavior in businesses is intricately linked to the outside world of business, to institutions that govern business, to wider socio political processes that incentivize or constrain whatever businesses – let alone individuals within them – are doing.

There are solid grounds to argue that this approach to researching ethical issues in business is still of highest relevance today.  On the opening panel of the conference Professor Margaret Blair gave a somewhat sobering account of recent court decisions in US corporate law. Blair, a longstanding authority and critic of the current shareholder dominated view of the firm, gave a short tour d’horizon of court rulings reflecting shareholder dominance as being stronger as never before (Ebay vs Newmark, Trado, CitizensUnited, Hobby Lobby). When the strongest institutions (in this case the law) governing business advocate a model of the firm which flies in the face of much of the basic tenets of the field of business ethics it appears that the odds are very much stacked against any of the aspirations of the field ever coming to fruition in the real world. 

The inspiration then from Donaldson’s work for business ethics scholars may be to further and refine some of the ‘Donaldsonian Themes’ (so the title of the conference); but it is fair to argue that the vision, courage and intellectual entrepreneurship to come up with new approaches of conceptualizing business in its wider societal context is maybe the biggest example and benchmark Donaldson has left for a next generation of business ethics scholars. Be it the relation of business and politics, be it the role of business in economic inequality, or be it the role of business in new technologies and big data – these are all new ethical challenges which ask for wider and deeper conceptualizations of the role of business and its embeddedness in wider society.

Business ethics is not an epiphenomenon

For most of its history, and to some degree still today, business ethics has been considered as a subfield of management that deals with side-effects of business, with fringe occurrences, with phenomena, that maybe are of interest to the odd practitioner here and there. Certainly many scholars in the core disciplines of management, such as strategy or finance would echo such a view.

During the conference many colleagues highlighted that Donaldson throughout his career has worked in overcoming this categorization of business ethics work. That includes a lot of his writings but also his service to the academic community of management scholars. He was actively leading the subgroup ‘Social Issues inManagement’ of the Academy of Management but also engaged in a number of ‘field constituting’ ventures. Most notably his time as Associate Editor of Academy of Management Review (the top journal  for management theory) in the mid 2000s has led to a spate of work originating from scholars in the business ethics field, which was developed under his editorship into papers that speak to the core of the management discipline.

The purpose of the firm, the effect of business on the ecology, the role of business in development or peace – just to name a few examples of business ethics topics – are no longer side-shows. Many of these questions - certainly post financial crisis – are topics that touch the core of the management discipline. Donaldson has left a great example that business ethics scholars have to raise their voice louder and speak to a wider community. Business ethics has something to bring to the party, and Donaldson in is writing and service, has shown how to do this really well.

Management research is a multi-disciplinary venture

One of the things that stands out when looking at Donaldson’s work over four decades is that research in management as an applied discipline is best when it is phenomenon driven. That partly explains the enormous variety of issues he has taken on. The intellectual rigour, theoretical precision and an impressive skill at interesting and accessible writing is what has set a benchmark for ongoing scholarly work. What strikes most is his success – together with other colleagues – to establish philosophy as a legitimate core discipline in management research.

Many management scholars still consider economics to be the main theoretical foundation of management studies – a view maybe still strongest reflected in some of the management studies communities in Europe. In the 1960s, certainly with the rise and growth of marketing and parts of organizational behavior research, we can now consider psychology as a legitimate member of the canonized disciplines of management inquiry.

But this project of widening the theoretical and disciplinary avenues to management research is not over yet. In his writing Donaldson has certainly elevated philosophy as a strong candidate; in his editorial work at AMR he has contributed to make approaches from political science, sociology and others more familiar to the core community of management researchers. We can argue that continuing to widen the disciplinary focus of research in management is truly a ‘Donaldsonian Theme’ and a task for current and future generations of business ethics scholars.

To conclude then, just this week Rolling Stone magazine ran a story on the influence of the Koch brothers on American politics. So as an afterthought - at the end of the conference there was arguably one topic conspicuously absent during the discussion: namely the phenomenon of power (corporate or political, alike). Looking at contemporary debates on, for instance, income inequality or on the roots and fallout of the financial crisis, this seems a somewhat conspicuous omission.  One explanation though could be that – as Richard DeGeorge, chair of the philosophy department during Donaldson’s PhD studies, pointed out at the conference – Donaldson as a student did not take too much liking in Karl Marx’ writings…

The good news then is that this weekend’s conference was not a celebration of Donaldson’s retirement. He will continue as Wharton faculty to be an active scholar and thus surprise, challenge and inspire us hopefully for many more years to come.

Top photo by frankrizzo805, reproduced under the Creative Commons License.

Thursday, June 26, 2014

Disrupting management ideas


Over the last days we have seen a captivating debate unfolding. Jill Lepore’s article in The New Yorker on the concept of ‘disruptive innovation’ has garnered quite some attention. Not at least from its progenitor, Lepore’s Harvard colleague Clayton Christenen, who appears to be anything but amused.

Disruptive innovations - put simply - are new products or services that create new markets, while at the same time turning existing solutions to customer demands obsolete, and thus destroying existing markets and the companies that serve them. In his many books, Christensen initially developed the idea from a corporate context (such as his floppy disk, steel, or construction equipment examples) but it quickly branched out into other sectors.

The article is a fascinating read not just because it takes on an idea largely uncontested in academia and beyond. Moreover, the concept of ‘disruptive innovation’ had quite a substantial impact on the real world. Lepore writes as a historian and delineates the superficial and ideological nature of the idea. The piece is also worthwhile reading as it exposes Christensen’s ‘case study’ approach (after all, a hallmark of its intellectual birthplace) to thorough historical analysis. The latter perspective debunks and exposes the data at the heart of Christensen’s ‘disruption’ theory as utterly wanting.

Now it is always fun to question conventional wisdom and powerful ideas, especially when they come from a Harvard Business School professor recently honored as the No 1 in the Top50 Thinkers ranking. As some of our readers might remember, we also enjoyed doing a similar job on his colleague Michael Porter’s ‘big idea’ on Creating Shared Value earlier this year. But there is the danger that those skirmishes just remain internal quibbles inside the ivory tower of which another former Harvard colleague, Henry Kissinger, once said that they ‘are so vicious because there is so little at stake’…

Lepore’s article clearly goes beyond that. Two things seem worth highlighting. First, she contextualizes a management theory in a wider intellectual historical context, and second, she shows that as such management ideas are deeply ideological constructs:
"Beginning in the eighteenth century, as the intellectual historian Dorothy Ross once pointed out, theories of history became secular; then they started something new—historicism, the idea “that all events in historical time can be explained by prior events in historical time.” Things began looking up. First, there was that, then there was this, and this is better than that. The eighteenth century embraced the idea of progress; the nineteenth century had evolution; the twentieth century had growth and then innovation. Our era has disruption, which, despite its futurism, is atavistic. It’s a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence. […] 
The idea of progress—the notion that human history is the history of human betterment—dominated the world view of the West between the Enlightenment and the First World War. It had critics from the start, and, in the last century, even people who cherish the idea of progress, and point to improvements like the eradication of contagious diseases and the education of girls, have been hard-pressed to hold on to it while reckoning with two World Wars, the Holocaust and Hiroshima, genocide and global warming. Replacing “progress” with “innovation” skirts the question of whether a novelty is an improvement: the world may not be getting better and better but our devices are getting newer and newer. […] 
The idea of innovation is the idea of progress stripped of the aspirations of the Enlightenment, scrubbed clean of the horrors of the twentieth century, and relieved of its critics. Disruptive innovation goes further, holding out the hope of salvation against the very damnation it describes: disrupt, and you will be saved."
Disruptive innovation in its reception in business, academia, public administration and politics had some rather devastating (side-)effects – as Lepore eloquently points out. The crucial lesson of her essay though lies in its unmasking of what sounds like a rather technocratic ‘theory’ as something that is deeply informed by a particular view of the world, by a particular normative take on how humans historically have evolved.
As the article points out, such functionalist and technocratic ‘theories’ totally ignore other dimensions of human life. ‘Disrupting’ – sold as a good thing and the natural way of how organizations evolve - ignores other important dimensions of human development, especially if the concept gets branched out and expedited beyond business to schools, hospitals, prisons, museums etc. The ethical implications of such a theory are totally ignored in Christensen’ framework – argues Lepore.

One central lesson of this article for everyone concerned with the role of business in contemporary society – be it academics, executives or politicians – points to the pivotal role of understanding the intellectual heritage and presuppositions of those core theories and ideas that have shaped contemporary social (incl. business) reality. In that sense, Lepore’s piece is a truly ‘critical’ contribution to management – and the set of historical ‘criteria’ by which she does the job should encourage particular management academics to move beyond the confines of their discipline. To understand the power of ideas we have to look at the broader picture of their origin, their contemporary drivers, but also their wider implications for society.


Photos (top by Andy Kaufman; middle by Nicolas Nova) reproduced under the Creative Commons license.

Tuesday, April 29, 2014

A ‘Sweet Spot’ in tackling climate change?


Today (Monday April 28, 2014) Jeremy Oppenheim was in Toronto. Oppenheim is the director of the  Global Commission on the Economy and Climate (chaired by former Mexican President Felipe Calderon, co-chairs include Lord Nicholas Stern and the OECD Secretary-General). He was hosted by Corporate Knights’ Toby Heaps for a 'high level' lunch which included some of the top brass of Toronto’s investment, real estate, insurance and academic communities. And civil society, of course, David Miller (ex-Major of Toronto and now Head of WWF Canada) was there, too.

It was, first off, a real game changing experience to see a room of 30ish ‘climate activists’ in pinstripes (or female equivalent) convening over antipasto e bistecca to discuss the plight of the planet. Oppenheim's remarks were thought provoking as they reflected the current gist among those leaders that care seriously about climate change.

Oppenheim started by highlighting that the public debate has somewhat stalled as most of conversations on climate change evoke pretty unsexy, depressing and un-cool truths. Going on and on about threats linked to climate change just makes you a boring party pooper.

At least in person – he was all but. Eloquently, engaging and thoughtfully he relayed his core points. What struck me most is that amongst the experts, the entire debate about ‘avoiding’ or ‘fighting’ climate change is yesterday’s news. Oppenheim stated clearly that – in my words - we just have to suck it up that temperatures are about to rise by two degrees. The damage is done. Today’s debate is really about how to avoid global warming to reach three or even four degrees. A sobering – and somewhat chilling assessment.

Oppenheim – no less a McKinsey director on leave from their London offices – then pointed to the currently explored strategy - which hopefully can become a game changer: highlight the 'positive' side of climate change (in my words). Or to put it this way: adapting to climate change can already make economic sense now! He ran through a couple of examples from many places around the globe. Here is just one: Deforestation in the Brazilian Amazon region has been identified as a great worry. What we see now though is that land owners in the Amazon are increasingly sympathetic to restrictions on turning rain forest into farm land: after all, the unlimited possibility of creating new farmland through cutting the forest decreases the value of their property. According to Oppenheim, those economic drivers are a huge force in favor of climate friendly policies.

It is interesting to see that a group of top business people is having this discussion. In the Canadian context, many of these will be laughed out of their Golf Clubs or seven star resorts in the Caribbean if they ever repeated to their buddies what they heard today. Canada, Oppenheim intimated with the maximum level of British politeness, is a real mess with regard to climate change action. So Oppenheim’s point was really that we have to change the story, change the way we communicate about it. Present it as a story of opportunity, rather than a story of threat. While Lord Stern’s report years ago was telling us ‘Pay a little now and you avoid being taken to the cleaners by climate change tomorrow!’ Oppenheim’s new message is: ‘You can actually make money on adapting to climate change NOW!’

I left the event with a somewhat ambiguous feeling. I was uplifted to see key players in business – from where most of the sources of carbon emissions are ultimately governed – acutely aware of the problem. I also liked the pragmatic gist of Oppenheim’s argument: We can use the current incentive structure in one of the most powerful engines of capitalism to ‘move the needle’ (I have to watch my language…) on pressing global issues. And - fair enough - there is some leeway.

At the same time, the by now worn out quote from Albert Einstein kept creeping up on me on my way home: “We cannot solve our problems with the same thinking we used when we created them.” A focus on short term economic gains for individual actors or organizations got us into this mess of climate change in the first place. And – we have to add – has prevented any large-scale meaningful response to date. So finding that ‘sweet spot’ (a quote from Jeremy Oppenheim’s McKinsey Website) where business interest and environmental needs converge may take us some way. But there can be little doubt that this is not going to really change the bigger picture.
DM
Photo by Tyler Hamilton/Corporate Knights.

Thursday, March 27, 2014

A practitioner's reflections on the problems of shared value

After our article on shared value came out in the California Management Review, and we published our last blog piece summarizing our critique, we've had a lot of response from various academics and practitioners in the corporate responsibility field. In fact, we've probably had more emails, comments and calls on this one article than we've had on anything else we've ever published. It has clearly struck a nerve. In the main, these responses have been very positive, suggesting that a lot of people have just been waiting for an article like this to come out. Here's just a smattering of some of the responses we've received (you can also read the comments to our blog post for more):

"This is a long over due excellent and comprehensive critique on the overly optimistic and shallow CSV framework that doesn't really address the real trade offs required to get to sustainable development."

"Good on you for re-framing this topic in a manner that more fully reflects the spirit of corporate social responsibility."

"It is some of the most enjoyable reading I have done in a very long time."

"Just read you CMR paper on CSV - well done. It is about time that someone took this idea apart."

Of course, many commentators, even whilst being supportive of our critique, have also pointed out some of the pragmatic benefits of Porter and Kramer's approach, like this one:

"I can see how the win-win wonderland (in Mintzberg's words) could be a diversion, but I wonder how it might crack existing inertias, and/or if any positive momentum could be leveraged for fashioning a more complete framework."

Such considerations of the lifeworld of business is a theme that is addressed in the discussion we have with Porter and Kramer at the end of our article, but is not something that we fully elaborate on. With this in mind, we thought it worthwhile to post here one of the more thoughtful and extended responses we received from a corporate responsibility practitioner. This is from Rory Sullivan, a veteran of the responsible investment community, now working as an independent advisor as well as being a Senior Research Fellow at the University of Leeds. He explores some of our points with regard to how CSR and CSV might be seen from a practitioner perspective. We thought they deserved reproducing here as they help to frame an important element of the debate in a constructive way:

"A proper analysis of the concept and value of ‘Creating Shared Value’ has been needed for some time, and your article does an excellent job of setting out the strengths and weaknesses of CSV. I was disappointed that Porter and Kramer failed to engage with the substantive points that you raised; their bludgeon of a response seemed at odds with the nuanced and careful arguments you presented in your article. While I support the broad lines of argument and analysis in your article, I would like to offer some reflections from a practitioner’s perspective:

  • Your discussion of “CSR as a Straw Man” is fair in its treatment of the academic literature (which has argued that CSR should be a corporate strategic priority). However, CSR in practice is quite different. In far too many companies, CSR continues to have limited business relevance (in terms of its influence on strategy or capital allocation) and remains far closer to philanthropy than the theoretical literature suggests (or would like).
  • On the originality of CSV: Your review of the literature ignored the many important practitioner contributions (e.g. by John Elkington, Stuart Hart, CK Prahalad) which have influenced CSR in practice. I suspect that many practitioners see CSV as a glossy reformulation of ideas such as the triple bottom line, rather than as a new framing of the debates around the role of business in society.
  • On the evidence for CSV: One of the key challenges faced by companies in practice is that ideas that work at a local level and at a small scale, may or may not work [in fact, they often don’t] when they are scaled up to the corporate level or when other companies try to replicate the experience. There are various reasons – the generalizability of approaches, the transaction costs, etc of moving to scale, the problems of taking projects and processes from one corporate culture and trying to implement them in another.
  • I’m not convinced by your argument that CSV is based on a shallow conception of the corporation in society. My (personal) reading of the Porter and Kramer article was that it was best understood as an analysis of the corporation in society, where the corporation is taken as the central unit of analysis (perhaps akin to every western individual being at the centre of their own personal narrative). In that frame of reference (which, I accept may not be what they had in mind), the concept of CSV could be interpreted as simply an argument that there are things that companies can do to make them a little more useful to (or a little less harmful) to society."
Plenty of food for thought there. Any more practitioners out there want to throw their two cents in?

Photo by Ross. Reproduced under Creative Commons licence

Tuesday, March 4, 2014

Four big problems with "Creating Shared Value"

The idea of "Creating Shared Value" (CSV) popularized by Michael Porter and Mark Kramer in the Harvard Business Review has probably done more to get corporate responsibility issues into the boardroom than anything else written in the last few years. In many respects, that is a good thing. Or at least it is until you start to realize all the big problems that are hidden behind the big ideas of CSV.

We've just published (together with Guido Palazzo and Laura Spence) a comprehensive critique of CSV in the California Management Review. The published version features a response from Porter and Kramer and a counter response from us which we think makes for quite enlightening reading (you can also download a free, but slightly different, version of our article but without this dialogue over at SSRN).

Our article sets out four main problems with CSV:

1. It is unoriginal. 
Porter and Kramer simply don't acknowledge that there is little new about CSV. People have been writing about much the same thing for decades. And the corporate initiatives they rebrand as CSV are just attempts to relabel practices that were already going ahead prior to them publishing their article. It's just that some people call those practices "strategic CSR," "social innovation," or "stakeholder management."

2. It ignores the tensions between social and economic goals.
CSV is presented as "moving beyond trade-offs" between social and economic goals. But that is only because Porter and Kramer ignore any such trade-offs that might need to be made. Sure, there are some great opportunities where business success can be aligned with social progress. But there are also a whole host of social problems, especially those caused by business, where social and economic goals inevitably conflict. CSV prompts managers to simply ignore them.

3. It is naive about business compliance
In a move very much reminiscent of Milton Friedman's famous critique of CSR, CSV "presumes compliance with the law and ethical standards, as well as mitigating any harm caused by the business". Of course, this is where all those messy "trade-offs" are hiding. But as long as you can presume them away, then you don't have to deal with them. In fact there is only one sentence dedicated to social harms, ethical norms and legal compliance in their whole article. So, let's just ignore all the occasions when firms harm people or the environment. Let's ignore all all the times they fail to uphold some of the laws and ethical customs of the places in which they operate. Then we can talk about CSV. But let's not pretend that this is a useful strategy for corporate responsibility or still less a sane way to re-legitimize business, as they claim in their article. Just getting firms to respect the spirit of the law - say in paying their fair share of taxes or respecting international labour standards across the globe - would be a much better way of re-legitimizing business.

4. It is based on a shallow conception of the corporation's role in society
CSV is supposed to be about "reshaping capitalism" but in reality it is really just more of the same of all the stuff that has given capitalism such a bad name - a blind focus on individual corporate self-interest. It will help solve some social problems, and will make some firms, and some stakeholders better off … but who are they kidding that this is going to save capitalism? What we need is a perspective that acknowledges the systematic nature of many of the problems we face, and a willingness from firms to engage in collaborative responses with other stakeholders to solve the problems that need solving. Not just those that can be cherry-picked to make a fast buck.

The point is not that CSV contributes nothing to the debate on corporate responsibility - there are some very good reasons why it has met with so much success, as we discuss in the article. But in ignoring much of which is actually problematic in the field it gives a very unrealistic picture of the challenges ahead. Managers looking to combine social welfare with economic prosperity simply deserve more than the whitewash that CSV offers them.

Wednesday, January 15, 2014

CSR in Africa: be part of it!

Today we have another guest post from our long-term friend and collaborator, Laura Spence, who is just back from the African Academy of Management Conference and had some reflections we thought would be good to share.
*  *   *   *   *   *
Given the laudable aims of corporate social responsibility protagonists - I guess, roughly speaking, to make the world a better place - you have to wonder why so much time and effort is put into understanding social responsibility in places where really, let’s face it, the social problems are not really that big.

Should we be stressing about which company sponsors school sports equipment, or would we be better occupied to worry about schools which have no books? Is corporate lobbying one of life’s big issues or could it rather be the conflation of corporations and governments, systemic bribery, corruption and nepotism? Should we be fretting about diversity training in head offices or focusing on situations where gender, race, class, caste, religious and tribal differences mean staggering inequalities in opportunities are ingrained? It paints a pretty miserable picture when you think about it.

For all this, understanding developing and emerging countries need not be a miserable enterprise. I have just come back from the fabulous African Academy of Management (AFAM) Conference in Botswana, with renewed understanding of social responsibility – or at least a whole new set of questions to ask.

Discussion around the conference was not so very different in many respects to other Academy events, but one thing kept surfacing – we might list the relative importance of issues in developing country contexts, but is there a different philosophical starting point? Are the frameworks based on Western capitalist systems of any real help outside of the ‘West’?

As is the way of things sometimes, a glimmer of an answer came for me in one of the few moments we had to get outside of the conference. We visited, by chance, a small exhibition of local artists’ work relating to the fight against HIV/AIDs. It was produced under a cross-sector partnership between government and a local NGO with the Tswana strap line ’Nna le sea be’. This roughly translates as ‘Be part of it’.

It is just a tourist-eye view of mine of course, but this felt different to me, not an approach I would expect to see elsewhere. There is something special about the local push for the acceptance of problems and drive to pull people together to join in and be a part of the solution, reflected through a local saying used in equal measure to help someone pick up something they have dropped, or work together to reduce the tragedy of HIV/AIDS. Surely this has implications for CSR in Africa.

Alongside this, another important realisation was the different pace in Botswana. Time and again when waiting for some service or other to be provided, one is met with ‘It’s coming’ or better still ‘Tomorrow’. It is a reminder how hung up some cultures are with everything being just so, preferably yesterday. When the pace of life slows, this does seem pretty absurd, but it also acts as a reminder that transferring expectations from one part of the world is a misguided approach to just about anything, not least CSR. It is likely to be far more helpful to learn from local perspectives, achievements and solutions. But patience might be needed.

My reason for being in Botswana was as part of the team offering a PhD training workshop and a stream on small and medium sized enterprises and social responsibility in developing countries funded by the UK Economic and Social Research Council. We have six seminars planned for 2014 and 2015, a book and as a result of the fascinating time had at AFAM 2014, we will be wrapping up our project at AFAM2016 in Ethiopia.

Nna le seabe.

Laura J. Spence

Thursday, January 2, 2014

Top 10 corporate responsibility stories of 2013

Plus ├ža change in corporate responsibility. If nothing else, 2013 provided ample evidence that, contrary to popular belief, corporate responsibility issues, even the huge stories that dominate the media, do not exactly come out of nowhere. So many of the top CR stories of the year, like the Rana Plaza disaster, Apple's tax problems, and JP Morgan's huge fine, were already prefaced by the big stories of the previous year. Among our top 10 of 2012 were a Bangladesh factory fire, corporate tax avoidance, criticism of tech companies, and prosecutions in the financial sector. So the writing was already on the wall for most of the big stories of 2013. It would appear, as Ethical Corporation editor Toby Webb said recently, that with all the excitement about new opportunities and win-wins, companies are underestimating the importance of sound ethical risk management in the corporate responsibility equation. So, if you want to know what CR risks lie ahead for 2014, you could do worse than checking through our list of the big stories of 2013.

1. Rana Plaza building collapse
Back in April 2013, more than 1100 people, mostly garment workers, died when the Rana Plaza building collapsed near Dhaka in Bangladesh. It was probably the single worst garment factory disaster yet, in an industry that has suffered more than its fair share of needless fatalities. But Bangladesh had already seen a series of major industrial accidents leading up to Rana Plaza, which had been met with little tangible response from business and government leaders. Rana Plaza looks to have at last changed that. The Accord on Fire and Building Safety in Bangladesh, signed by nearly 100 global retailers, as well as labour unions and NGOs is a legally binding agreement to ensure worker safety through independent factory inspections, mandatory repairs, financial support, and sanctions for noncompliance. More than 2m vulnerable Bangladeshi garment workers are already covered by the Accord. A competing agreement, signed by Walmart, Gap, Target and other North American companies was criticized for having weaker enforcement and failing to involve labor unions. Nonetheless, both pacts are evidence that factory safety in Bangladesh is finally getting the concerted attention it deserves.

2. Apple's tax avoidance
Corporate tax avoidance had been a growing story in the UK and elsewhere prior to 2013, as evidenced by our top stories listing of 2012. But the issue exploded onto the public consciousness when Apple's CEO Tim Cook was forced to testify to a Senate committee in Washington back in May of this year. The company had avoided paying literally billions of dollars in tax by exploiting various loopholes in international tax treaties and funnelling its European profits through a shell company in Ireland. All completely legal, of course, but hardly what the public expects of a good corporate citizen. Now that attention to corporate tax avoidance has gone global, and with inequality and government debt the two biggest global risks today, the obvious questions are which country will be next in taking aim and which company will be in the firing line? Corporate tax reform is also undoubtedly going to loom even larger in the coming year.

3. NSA spying
Without doubt, Edward Snowden's whistleblowing on the US National Security Agency's (NSA) mass surveillance programs was the story of 2013. Nothing else even got close. However, the corporate responsibility dimensions still remain somewhat murky, which is why it doesn't quite make it to the top of our list. We do know, however, that telecoms companies like Verizon are required to hand over all call records  (or "metadata") to the NSA about cell phone calls made in the US. We also know that none of these companies ever sought to challenge the legality of the action. Another revelation was that the secret PRISM spying program allows the NSA to tap into the servers of internet companies like Google and Microsoft to access customer data. We also know that NSA pays millions of dollars to these same companies. We do not yet know exactly how complicit tech companies have been in the whole mess but one thing for sure is that they now realize that the NSA spying story is undermining their customers' trust and are calling for government reform. Expect much more to come in 2014.

4. JP Morgan's $13bn misconduct settlement
Our annual list of major corporate responsibility stories would not be complete without an entry from the finance industry. As we predicted at the beginning of the year, 2013 was marked by the return of government and some major financial sector scalps. None of these was bigger than the whopping $13bn fine landed on JP Morgan for misleading investors in the same of mortgage backed securities in the lead-up to the financial crisis. To date, it is the settlement ever between the US government and a corporation, and will come as some (though probably not enough) relief to those who have viewed most of the finance sector giants as getting away with the crisis relatively unscathed. On the other hand, JP Morgan is probably pretty sore about catching the flack for misconduct that was less about their own practices and more down to firms like Bear Stearns that they were encouraged by the US government to acquire at the height of the meltdown. No one comes out of this looking good.

5. Europe's horse meat scandal
At the beginning of the year, the big news was all about horse meat turning up in products it wasn't supposed to be in. Like those clearly labelled as "beef". The scandal started in the UK, quickly spread to a suspect supplier in Ireland, and soon rocked much of Europe. Customer trust rapidly evaporated as it became clear that effective oversight of the food industry was sorely lacking. Companies acted quickly to withdraw potentially contaminated products and shore up confidence but further revelations of large scale criminal activity in the food supply chain will do little to restore trust in a thoroughly compromised industry.

6. India's new CSR law
The world's largest democracy now has the world's most extensive CSR legislation. But that is not necessarily a good thing. Under the new Companies Act, passed by the Indian Parliament in August 2013, large Indian companies must spend at least 2 per cent of their net profits on CSR each year from 2014 onwards. It also requires firms to set up a CSR board committee and institute a CSR policy. The new CSR legislation has met with a mixed reaction, especially as it seems to institutionalize a somewhat backward looking approach to CSR which emphasizes philanthropic giving whilst ignoring the core strategic business of the firm. It will also be incredibly hard to enforce in a country already hamstrung by an overburdened legal system. On the plus side, the legislation does force many of India's laggard companies to finally take some responsibility for the various social problems faced by the country's citizens. For better or worse, CSR is no longer something that can be ignored in India.

7. Chevron's Ecuador pollution case
It has been a big year for Chevron and Ecuador in their long-running, aggressively-fought pollution case. In November, the Ecuadorean high court made its long-awaited appeal decision which upheld the original 2011 judgement requiring Chevron to pay $9bn to compensate for contaminating the rainforest during crude oil extraction over two decades ago. Chevron has never operated in Ecuador but inherited the lawsuit and its toxic legacy when it took over Texaco, the original operator, in 2001. For its part Chevron continues to dispute the legality of the ruling and has refused to pay. The appeal was at least partially successful for Chevron by halving the original $18bn damages bill, but not in overturning the decision. Chevron is now awaiting the outcome of a counter-suit heard last month in the US against the plaintiff's main lawyer, who the company claims engaged in bribery and fraud to secure the conviction. Meanwhile, attempts by the plaintiffs to seize Chevron's assets overseas to pay the fine also had their ups and downs in 2013. For example, Canada first denied them the rights of enforcement in May, only for a judge to overturn the decision on appeal in December. Other actions are underway in Brazil and Argentina. This has fast turned into a test not only of the Ecuadorean legal system, but of the global legal system's appetite to prosecute international legacy corporate responsibility issues.

8. Rosia Montana mining protests 
2013 saw major protests against mining operations all over the world, including Australia, Canada, Columbia, Greece, Niger, Peru, even Tibet. But the biggest of the lot was probably in Romania, which saw a mass protest movement arise in response to plans to mine around the town of Rosia Montana. If approved, it would be Europe's largest gold mine but critics claim that it would inflict untold social, environmental and cultural damage. Mass street protests erupted after the government proposed a new law that would enable the Rosia Montana Gold Corporation (majority owned by the Canadian mining company Gabriel Resources) to finally start operations after years of failing to acquire the necessary environmental permits. At stake here then is not just the proposed mine but the legitimacy of the democratic process, which protesters feel has been fatally undermined by the hastily forced through legislation. As one protester put it: "People today confront a corrupted political class backed up by a corporation and a sold out media; and they ask for an improved democratic process, for adding a participatory democracy dimension to traditional democratic mechanisms."

 9. New UN Global Compact 100 Index
There were several entrants to the new corporate responsibility standards and guidelines category in 2013, with the G4 guidelines of the Global Reporting Initiative probably being the most talked about. But September's launch of the Global Compact's new stock market index, the Global Compact 100, for us represented the most significant development. First, as John Entine noted, it offered a welcome new development in a social investing field "hungry for innovation and dogged by ideological correctness". But more than that it showed just how far the UN was willing to push the needle on its voluntary approach to corporate responsibility that heavily prioritizes incentives rather than enforcement. While many are still criticizing the Global Compact for not having sharp enough teeth to weed out laggards and green washers, the new index makes it abundantly clear that the UNGC is moving in a very different direction. Ten years ago it would still have been unthinkable, but the reality is that the UN is no longer just in the business of accords, declarations, and principles but is now also firmly in the finance industry.

10. South Korea's nuclear corruption scandal
GSK's corruption scandal in China may have got most of the headlines, but in our book, the corruption scandal that has engulfed South Korea's nuclear industry this year tops it for potential impact. Two short years after Japan's Fukishima disaster, neighbouring South Korea is also facing a devastating loss of confidence in its nuclear industry which supplies about a third of the country's energy needs. The scandal has centred on a swathe of faked safety certificates that have been issued for critical nuclear reactor parts over the years, and the bribes that have allegedly been paid to look the other way. Most commentators pin the blame on the closed structure of the nuclear industry in South Korea with only a single national operator and close ties between the operator, suppliers and testing companies. The prime minister has likened the industry to the mafia. A number of reactors have been shut down, trust in the industry has plummeted, a national energy shortage is underway, and now some 100 officials have been indicted for their part in the scandal. Corruption that compromises the safety of the nuclear industry is probably about as bad as it gets. And its unclear yet whether South Korea can really turn this one around.

Photo by rijans. Reproduced under Creative Commons licence